Answer:
A. $11,969.3
B. $1,195,909.1
Explanation:
a. Calculation for How much was each granddaughter entitled to if the interest rate was 4%
First step is to calculate the Time period
Time period=2002-1880
Time period=122 years
Now let calculate the Future value using this formula
Future value=PV(1+r)^122 years
Let plug in the formula
Future value=$100(1+0.04)^122 years
Future value=$100(1.04)^122 years
Future value=$11,969.3
Therefore How much was each granddaughter entitled to if the interest rate was 4% will be $11,969.3
b. Calculation for How much was each entitled to if the interest rate was 8%
First step is to calculate the Time period
Time period=2002-1880
Time period=122 years
Now let calculate the Future value using this formula
Future value=PV(1+r)^122 years
Let plug in the formula
Future value=$100(1+0.08)^122 years
Future value=$100(1.08)^122 years
Future value=$1,195,909.1
Therefore How much was each entitled to if the interest rate was 8% will be $1,195,909.1
Question
Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows.
Income (Loss) Tax Rate
2006 $29,000 30 %
2007 40,000 30 %
2008 17,000 35 %
2009 48,000 50 %
2010 (150,000 ) 40 %
2011 90,000 40 %
2012 30,000 40 %
2013 105,000 40 %
2014 (60,000) 45 %
Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized.
a) What entries for income taxes should be recorded for 2010? .
b) Indicate what the income tax expense portion of the income statement for 2010 should look like. Assume all income (loss) relates to continuing operations.
c)What entry for income taxes should be recorded in 2011?
d) How should the income tax expense section of the income statement for 2011 appear?
e) what entry for income taxes should be recorded in 2014
f) how should the income tax expense section of the statement for 2104 appear to be ?
?
Answer:
A. Dr Deferred Tax Asset 60,000.00
Cr Deferred Tax 60,000.00
B. Income Statement (Partial)
Current Tax -
Deferred Tax (60,000.00)
Total Tax (60,000.00)
C.Dr Deferred Tax Asset 36,000
Cr Deferred Tax 36,000
D. Income Statement (Partial)
Current Tax -
Deferred Tax 36,000
Total Tax 36,000
E. Dr Deferred Tax Asset 27,000
Cr Deferred Tax 27,000
F. Income Statement (Partial)
Current Tax -
Deferred Tax 27,000
Total Tax 27,000
Explanation:
A. Calculation for what the entries for income taxes should be recorded for 2010
Entries for Income tax for 2010
Dr Deferred Tax Asset 60,000.00
Cr Deferred Tax 60,000.00
2010 (150,000 *40 %)
(To record timing difference of carry forward losses)
b) Indication for what the income tax expense portion of the income statement for 2010 should look like. :
Felicia Rashad Corporation
Income Statement (Partial)
Current Tax -
Deferred Tax (60,000.00)
Total Tax (60,000.00)
c) Calculation for what the entries for income taxes should be recorded for 2011
Dr Deferred Tax Asset 36,000
Cr Deferred Tax 36,000
2011 (90,000* 40 %)
(To record deferred tax asset utilization)
d) Income tax expense section of the income statement for 2011 appear
Felicia Rashad Corporation
Income Statement (Partial)
Current Tax -
Deferred Tax 36,000
Total Tax 36,000
e) Calculation for what the entries for income taxes should be recorded for 2014
Dr Deferred Tax Asset 27,000
Cr Deferred Tax 27,000
2014 (60,000*45 %)
(To record deferred tax asset utilization)
f) Income tax expense section of the income statement for 2014 appear
Felicia Rashad Corporation
Income Statement (Partial)
Current Tax -
Deferred Tax 27,000
Total Tax 27,000
Solivan Corp. incurred the following costs during the current year:
Construction of preproduction prototypes $180,000
Testing in search of process alternatives 110,000
Design of tools, jigs, molds, and dies involving new technology 115,000
Engineering follow-through in an early phase of commercial production 80,000
Seasonal or other periodic changes to existing products 105,000
In its income statement, Solivan should report research and development expense of:________
a. $295,000
b. $370,000
c. $405,000
d. $375,000
Answer:
c. $405,000
Explanation:
Calculation of R$D Expenses to be report in Income statement
Construction of pre-production prototypes $180,000
Testing in search of process alternatives $110,000
Design of tools, jigs, molds, and dies $115,000
involving new technology
Total R&D Expenses $405,000
Note: Engineering follow-through in an early phase of commercial production & Seasonal or other periodic changes to existing products are excluded from calculation of Research and Development Expenses.
How can we avoid water pollution
Answer:
Pick up litter and throw it away in a garbage can.Blow or sweep fertilizer back onto the grass if it gets onto paved areas. ...Mulch or compost grass or yard waste. ...Wash your car or outdoor equipment where it can flow to a gravel or grassed area instead of a street.Don't pour your motor oil down the storm drain.hope it helps you
please mark me as brainlist
Consider the following data that gives the quantity produced and unit price for three different goods across two different years to answer the following questions. Assume that the base year is 2012. Good2012 Price2012 Quantity2013 Price2013 Quantity A$2.00 500$2.50600 B$4.001,000$5.00900 C$2.00 200$1.00300 What was the real gross domestic product (GDP) in 2013
Answer:
$5400
Explanation:
Gross domestic product is the total sum of final goods and services produced in an economy within a given period which is usually a year
GDP calculated using the expenditure approach = Consumption spending by households + Investment spending by businesses + Government spending + Net export
Real GDP is GDP calculated using base year prices. Real GDP has been adjusted for inflation.
($2 x 600) + ($4 x 900) + ($2 x 300) = $5400
A company has a contract with the president that it has just hired. According to the contract a one-time payment of $24,800,000 will be paid to the president when he completes his first 9 years of service. For this purpose, the company would like to set aside equal amounts of money, once each year, in order to cover this anticipated large expense. The company can earn 8 percent on these amounts of money. How much will it need to set aside each year
Answer:
$1,985,976.79
Explanation:
The formula for finding the amount is :
A = FV/ annuity factor
Annuity factor = {[(1+r)^n] - 1} / r
FV = Future value = $24,800,000
A = Amount
R = interest rate = 8%
N = number of years = 9
Annuity factor = (1.08^9 - 1 ) / 0.08 = 12.487558
$24,800,000 / 12.487558 = $1,985,976.79
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows:
FMV Adjusted Basis Appreciation
  Cash $32,250 $32,250
  Receivables 18,600 18,600
  Building 136,000 68,000 68,000
  Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
  Mortgage* 135,750 135,750
Total $162,950 $162,950
Ernesto was asking for $408,000 for the company. His tax basis in the BLI stock was $150,000. Included in the sales price was an unrecognized customer list valued at $150,000. The unallocated portion of the purchase price ($68,000) will be recorded as goodwill. Required:
a. What amount of gain or loss does BLI recognize if the transaction is structured as a direct asset sale to Amy and Brian? What amount of corporate level tax does BLI pay as a result of the transaction, assuming a tax rate of 34 percent?
b. What amount of gain or loss does Ernesto recognize if the transaction is structured as a direct asset sale to Amy and Brian, and BLI distributes the after-tax proceeds (computed in question a) to Ernesto in liquidation of his stock?
c. What is the nature of tax benefits to Amy and Brian as a result of structuring the acquisition as a direct asset purchase?
d. What is the tax basis in the assets received by Amy and Brian?
Answer:
Bottom Line, Inc. (BLI)
a. The amount of gain that BLI should recognize if the transaction is structured as a direct asset sale to Amy and Brian is:
= $199,400
BLI will a corporate tax of $ 67,796 ($199,400 * 34%) as a result of the transaction.
b. The amount of gain that Ernesto recognizes when BLI distributes the after-tax proceeds to Ernesto in liquidation of his stock is:
= $190,204
c. Amy and Brian can step up the tax basis of the assets to their fair market values.
d. The tax basis in the assets received by Amy and Brian is:
= $408,000
Explanation:
a) Data and Calculations:
FMV Adjusted Basis Appreciation
Cash $32,250 $32,250
Receivables 18,600 18,600
Building 136,000 68,000 68,000
Land 269,250 89,750 179,500
Total $456,100 $208,600 $247,500
Payables $27,200 $27,200
Mortgage* 135,750 135,750
Total $162,950 $162,950
Net Value $293,150 $45,650
Sales price for the company = $408,000
Ernesto tax basis in BLI stock = 150,000
Difference = $258,000
Unrecognized customer list = 150,000
Unallocated Goodwill = $108,000
Gain to be recognized if transaction is a direct asset sale:
Sales price = $408,000
Adjusted basis 208,600
Capital gain = $199,400
After-tax proceeds:
Sales price = $408,000
Corporate tax on capital gain = $ 67,796
After-tax proceeds = $340,204
Ernesto's tax basis = 150,000
Capital gain for Ernesto = $190,204
Sigma Corporation applies overhead cost to jobs on the basis of direct labor cost. Job V, which was started and completed during the current period, shows charges of $6,700 for direct materials, $9,500 for direct labor, and $6,270 for overhead on its job cost sheet. Job W, which is still in process at year-end, shows charges of $4,100 for direct materials and $4,100 for direct labor.
Required:
Calculate the overhead cost be added to Job W at year-end
Answer:
Job W= $2,706
Explanation:
First, we need to calculate the predetermined overhead rate based on allocated overhead to Job V:
Job V:
Direct labor= $9,500
Allocated overhead= $6,270
Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base
6,270= Estimated manufacturing overhead rate*9,500
6,270/9,500= Estimated manufacturing overhead rate
Estimated manufacturing overhead rate= $0.66 per direct labor dollar.
Now, for Job W:
Job W= 0.66*4,100
Job W= $2,706
Olympic Sports has two issues of debt outstanding. One is a 5% coupon bond with a face value of $33 million, a maturity of 10 years, and a yield to maturity of 6%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 6%. The face value of the issue is $38 million, and the issue sells for 90% of par value. The firm's tax rate is 30%.
a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. What is Olympic's after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Answer and Explanation:
The computation is shown below
a. For before tax cost of debt
But before that following calculations need to be determined
For Bond 1:
Face value = $33,000,000
Coupon payment = 0.05 × $33,000,000 = $1,650,000
The Price of the bond is
= Coupon × [ 1 - 1 ÷ ( 1 + r)^n] ÷ r + FV ÷ ( 1 + r)^n
= $1,650,000 × [ 1 - 1 ÷ ( 1 + 0.06)^10] ÷ 0.06 + $33,000,000 ÷ ( 1 + 0.06)^10
= 1,650,000 × 7.360087 + 18,427,027.64
= $30,571,171.196
For Bond 2:
Price = 0.9 × $38,000,000
= $34,200,000
Now
Coupon = 0.06 × $38,000,000
= $2,280,000
Now before tax cost of debt is
Given that
PV -$34,200,000,
FV $38,000,000,
N 15,
PMT $2,280,000
The formula is shown below:
= RATE(NPER,PMT, PV,FV,TYPE)
After applying the above formula, the Before tax cost of debt of bond is 7.1053%
Now
Total market value is
= $34,200,000 + $30,571,171.196
= $64,771,171.19
And,
finally
Before tax cost of debt for olympic is
= ($30,571,171.196 ÷ 64,771,171.19) × 0.06 + ($34,200,000 ÷ 64,771,171.19) × 0.071053
= 0.028319 + 0.037517
= 0.0658 or 6.58%
b)
And,
After tax cost of debt is
= 0.0658× ( 1 - 0.3)
= 0.0461 or 4.61%
Assuming a 12% annual interest rate, determine the present value of a five-period annual annuity of $5,000 under each of the following situations:
1. The first payment is received at the end of the first year, and interest is compounded annually.
2. The first payment is received at the beginning of the first year, and interest is compounded annually.
3. The first payment is received at the end of the first year, and interest is compounded quarterly.
Depoosite date: 12/31/17, i=?, n=?, Deposit= $4100, PV - 12/31/16: ?
Deposite date 12/31/18, i=?, n=?, Deposit=$4100, PV -12/31/16: ?
Deposite date: 12/31/19, i=?, n=?, Deposit= $4100, PV- 12/31/16: ?
Deposti date: 12/31/20, i=?, n=?, Depostie= $4100, PV - 12/31/16: ?
Deposit date: 12/31/21, i=?, n=?, deposite=$ 4100, PV - 12/31/16: ?
Solution :
Annual payment = [tex]$\$ 5000$[/tex]
1. The rate of interest annually = 12%
Present value [tex]$=\$5000 \times \text{PVA of} \ \$1(12\%, 5)$[/tex]
[tex]$=\$5000 \times 3.60478$[/tex]
= $ 18,023.90
2. The rate of interest annually = 12%
Present value [tex]$=\$5000 \times \text{PVAD of} \ \$1(12\%, 5)$[/tex]
[tex]$=\$5000 \times 4.03735$[/tex]
= $ 20,186.75
3. The rate of interest annually = 12%
The rate of interest quarterly = 3%
Present value = [tex]$\$5000 \times \text{PV of} \ \$1(3\%, 4) + \$5000 \times \text{PV of} \ \$1(3\%, 8) +\$5000 \times \text{PV of} \ \$1(3\%, 12) $[/tex] [tex]$+\$5000 \times \text{PV of} \ \$1(3\%, 16) + \$5000 \times \text{PV of} \ \$1(3\%, 16)$[/tex]
[tex]$= \$5000 \times 0.88849 + \$5000 \times 0.78941 + \$5000 \times 0.70138 + \$5000 \times 0.62317 + \$5000 \times 0.55368$[/tex][tex]$=\$ 17,780.65$[/tex]
Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In 2010, Stanislaw built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, Stanislaw sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During 2011, Stanislaw selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. In 2012, Stanislaw planted new seedlings to replace the trees cut at a cost of $100,000.
Instructions
a. Determine the depreciation expense and the cost of timber sold related to depletion for 2011.
b. Stanislaw has not logged since 2011. If Stanislaw logged and sold 900,000 board feet of timber in 2022, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber sold related to depletion for 2022.
Answer:
a. Depreciation expense = Cost/Life = $84,000/30 = $2,800 per year
b. Cost of timber sold = Per arce - Land value = $1,400 - $400 = $1,000
Timber value = Cost of timber sold * Acre = $1,000 * 9,000 acres = $9,000,000
Land value = Timber value/Estimated Board feet * Sold Board feet = 9,000,000/3,500,000 * 700,000 = $1,800,000
Total Cost of timber sold = Timber value - Land value = $9,000,000 - $1,800,000 = $7,200,000
Depletion = Timber value * [Total Cost of timber sold+Replacement cost/Estimated Board feet]
Depletion = $900,000 * $7,200,000+$100,000/5,000,000
Depletion = $900,000 * 1.46
Depletion = $1,314,000
For each of the following scenarios, please decide whether there will be an increase, decrease, or no change in aggregate demand.
a. The United States government decides to increase the federal tax rate by 4% for all earners.
b. The Federal Reserve, the agency charged with regulating banking and monetary policy in the United States, decides to increase the amount of money available in the economy.
c. The newest release of the Consumer Confidence Index shows a steady increase in consumer confidence about the economy.
d. A manufacturing boom during the late 1990s has created an oversupply of tractors, a necessary implement in agricultural production.
Answer:
a. Decrease
If the Federal government increases taxes on people, they will have less money to spend and save after paying their taxes. This will reduce their consumption and investment (savings) thereby leading to a lower aggregate demand.
b. Increase
An increase in the money supply means that people will have more money to spend on goods and services. They will therefore consume more. More money in the economy reduces interest rates so people will borrow to invest more as well. These two things will combine for an increase in aggregate demand.
c. Increase
If consumers are more confident about their economy, it means they find it safe to invest in it. As they invest, the investment component of aggregate demand would rise which would increase aggregate demand.
d. Decrease
The oversupply from recent years will mean that investment required in recent years will be less. This will lead to a lower aggregate demand.
Most interest-paying checking accounts exhibit characteristics of both checking and savings accounts. Specifically, they earn relatively high rates of interest, especially compared with regular savings accounts, and allow relatively limited check-writing privileges. They are available through depository and nondepository institutions, including commercial banks, savings banks, credit unions, stock brokerage firms, mutual funds, and other financial services companies. What are some of the important characteristics of the following four major types of interest-paying checking accounts?
a. AMA: Asset Management Accounts
b. MMDA: Money Market Deposit Accounts
c. MMMF: Money Market Mutual Funds
d. NOW: Negotiable order of Withdrawal
Answer:
Some of the important characteristics are explained below:
a. AMA (Assets management accounts):
This account offers a various service to the account holders such as verifying the accounts, debit or credit card facilities, transfers of money between the accounts of account holders and provides facility of lower interest rate on loan.
b. MMDA (Money market deposit accounts):
This is a saving account which helps to the account holders in earning higher rate of annual yield as compared to the traditional savings account. This account needs a higher minimum balance in accounts of the accounts holder as compared to the standard savings bank account.
c. MMMF (Money market mutual funds):
This is a account which facilitates to the individual to invest their money in debt or securities for a short term period and they can be withdrawal their money when they require or needs the money.
d. NOW (Negotiable order of withdrawal):
This is the interest earnings account which facilitates to the account holders in making the drafts in against of the money which they deposit with their respective banks.
the point where total expenses equals to total income?
Answer:
yfku
Explanation:
George secured an adjustable-rate mortgage (ARM) loan to help finance the purchase of his home 5 years ago. The amount of the loan was $350,000 for a term of 30 years, with interest at the rate of 9%/year compounded monthly. Currently, the interest rate for his ARM is 3.5%/year compounded monthly, and George's monthly payments are due to be reset. What will be the new monthly payment
Answer:
$1,680
Explanation:
during the first 5 years, the monthly payment will = $2,816.18
I prepared an amortization schedule. After the 60th payment, the principal owed = $335,580
the new monthly payment considering that the interest rate fell significantly to 3.5% = $1,680
calculation to determine the monthly payment:
present value of the loan = monthly payment x PVIFA
monthly payment = present value / PVIFA
PVIFA, 0.29167%, 300 periods = 199.7501
monthly payment = $335,580 / 199.7501 = $1,680
The common stock of Eddie's Engines, Inc. sells for $18 a share. The stock is expected to pay $1.58 per share next month when the annual dividend is distributed. Eddie's has established a pattern of increasing their dividends by 2.8% annually and expects to continue doing so. What is the market rate of return on this stock
Answer:
11.6%
Explanation:
Calculation for What is the market rate of return on this stock
Using this formula
Rate of return=D/P + g
Where,
D=1.58 per share
P=$18
g=.028
Let plug in the formula
Rate of return=1.58/$18+.028
Rate of return =0.088+.028
Rate of return=0.116*100
Rate of return=11.6%
Therefore the market rate of return on this stock will be 11.6%
sally borrowed $1000 from her friend monique two years ago. their arrangement required sally to repay $250 each year for the subsequent four years. Today with two paymewnts remaining on the loan, Sally offers to repay the loan with a single payment of $475. Assuming no change in interest rates throughout the entire time, should monique accept the signle $475 payment today, why or why not
Answer:
a
Explanation:
Here are the options to this question :
A. yes, 475 is more than the PV of the two remaining payments
B. More information is needed to decide
C. Monique is indifferent between the options, the PVs are equivalent
D. No, the PV of the remaining two payments is more than 475
We have to determine the present value of the remaining two payments and compare the options
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 0
Cash flow in year 2 = 0
Cash flow in year 3 = 250
Cash flow in year 4 = 250
I = 2%
PV = $466.54
$475 is greater than $466.54. Therefore, she should accept the single $475 payment
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
it is a type of business that keeps the dealings,assets,and bank accounts seperate from his/her personal assets?
Answer:
A sole proprietorship
Explanation:
A sole proprietorship is a business owned, organized, and run by a sole proprietor. It is legally advisable that all business and private activities of any form of business are conducted separately. Commingling business dealings, assets, and especially bank accounts with private affairs do cause problems for the business person.
Yard Tools manufactures lawnmowers, weed-trimmers, and chainsaws. Its sales mix and unit contribution margin are as follows.
Sales Mix
Unit Contribution
Margin
Lawnmowers 20 % $30
Weed-trimmers 50 % $20
Chainsaws 30 % $40
Yard Tools has fixed costs of $4,200,000.
Compute the number of units of each product that Yard Tools must sell in order to break even under this product mix. (Use Weighted-Average Contribution Margin Ratio rounded to 2 decimal places e.g. 0.25 and round final answers to 0 decimal places, e.g. 2,510.)
Lawnmowers
units
Weed-trimmers
units
Chainsaws
units
Answer:
Lawnmowers= 30,000
Weed-trimmers= 75,000
Chainsaws= 45,000
Explanation:
First, we need to calculate the weighted average contribution margin:
Weighted average contribution margin= sales proportion*unitary contribution margin
Weighted average contribution margin= (0.2*30) + (0.5*20) + (0.3*40)
Weighted average contribution margin= $28
Now, the break-even point in units for the whole company:
Break-even point (units)= Total fixed costs / Weighted average contribution margin
Break-even point (units)= 4,200,000 / 28
Break-even point (units)= 150,000
Finally, the number of units to be sold for each product:
Lawnmowers= 0.20*150,000= 30,000
Weed-trimmers= 0.5*150,000= 75,000
Chainsaws= 0.3*150,000= 45,000
Inattentive Driving. While cutting class and driving off campus to check on her new dress for the upcoming formal, Molly, a busy college student, is busy talking on her cell phone with her friend Sharon. Molly is trying to talk Sharon into going to the dance with her brother, who has a big crush on Sharon. Unfortunately for Molly, there is a statute in her state outlawing talking on a cell phone while operating a motor vehicle. Molly crashes into the side of Sam's new convertible when she looks down to pick up a can of soda she just dropped onto her new jeans. A police officer just down the street comes over to investigate. Molly explains to him that it was difficult to hold the cell phone in one hand, the soda in the other, and also drive. The officer was not impressed. Around that time Sam comes along. He is furious regarding the significant dent in his new car. Molly says she has insurance and that she will cover the whole incident. Sam says that is insufficient. The officer is annoyed because it is his lunch break. He tells Molly that she must obey the law and proceeds to write several citations to her. Which of the following is true regarding Molly's predicament?
A. Public law only.
B. Private law only.
C. Public law, private law, civil law, and criminal law.
D. Criminal law and public law only.
E. Civil law and private law only.
Answer:
C.
Explanation:
Under civil law, Molly has caused damages to sam's car and she has to be held liable for this.
She has also violated criminal law as her action is against the public as a unit. She violated this by driving and endangering the lives of people by talking on phone while driving.
She has also violated public alw as criminal law is one of the types of public law.
She is in violation of private law by causing damages to sam's car. Private law has to do with the relationship existing between people, one of such example is the law of property.
It is estimated that the annual sales of an energy saving device will be 20,000 the first year and increase by 10,000 per year unitl 50,000 units are sold during the fourth year. Proposal A is to purchase manufacturing equipment costing $120,000 with an estimated salvage value of $15,000 at the end of 4 years.Proposal B is to purchase equipment costing $280,000 with an estimated salvage value of $32,000 at the end of 4 years. The variable manufacturing cost per unit under proposal A is estimated to be $8,00, but is estimated to be only $2.60 under proposal B. If the interest rate is 9%, which proposal should be accepted for a 4-year production horizon?
Answer:
Proposal B should be accepted
Explanation:
1 2 3 4
Sales(Units) 20,000 30,000 40,000 50,000
Variable Cost (A) 160,000 240,000 320,000 400,000- 15,000
Variable Cost (B) 52,000 78,000 104,000 130,000 - 32,000
PV Factor(9%) 0.917 0.841 0.772 0.708
PV OF Variable Cost(A) 146,720 201,840 247,040 272,580
PV of Variable Cost(B) 47,684 65,598 80,288 69,384
Total PV of Variable Cost of A: $868,180
Total PV of Variable Cost of B: $262,954
Difference in PV of Expenses= $605,226
Difference in PV of Outflow = 280,000 - 120,000 = $160,000
So, Proposal B should be accepted because it has a cost saving of Net $445,226 (605,226 - 160,000).
Solve each of the following three problems, all of which involve borrowing money from a bank with an APR of 6.5% compounded annually. Look carefully at how the problems differ from one another, in spite of appearing similar. In your solutions, say a few words explaining how you can tell which is the appropriate formula to apply in each case.
a. Suppose that you borrow $1000 once per year, beginning today, and ending 10 years from now (so you borrow your last $1000 on the ten year anniversary of today’s date). How much will your total debt be at the end of the 10th year?b. Suppose that you borrow $10,000 today. You repay the loan over the course of ten years, making a payment every year on the anniversary of today’s date. The first payment will be one year from today, and the last payment will be ten years from today. How much should each payment be?c. Suppose that you borrow $10,000 today, and repay the loan all at once, on the ten year anniversary of today’s date. How much will you have to repay on that date?
Answer:
a. The formula is annuity immediate. This requires annual addition at the end of each period. The total debt at the end of the 10th year is $16,248.70.
b. Amortized loan repayment is applicable here since the loan and interest are repaid every year. Therefore, the payment every year is: $1,391.05.
c. The compound interest formula is used here since the interest accumulates annually but repayment of loan is due at the end of 10 years. The total debt due for repayment at the end of the 10th year is $18,771.37.
Explanation:
1. Data and Calculations:
Starting Principal = $1000
Annual Addition = $1000
Annual interest rate = 6.5%
Period of loan = 10 years
The formula is annuity immediate. This requires annual addition at the end of each period.
Using the annuity calculator for annual addition at the end of each period, the loan's:
End Balance $16,248.70
Total Principal $11,000.00
Total Interest $5,248.70
2. Starting Principal = $10,000
Annual interest rate = 6.5%
Period of loan = 10 years
Amortized loan repayment is applicable here since the loan and interest are repaid every year. Therefore, the payment every year is: $1,391.05
Total of 10 Payments $13,910.47
Total Interest $3,910.47
3. Starting Principal = $10,000
Annual interest rate = 6.5%
Period of loan = 10 years
Compound interest formula is used here since the interest accumulates annually but repayment of loan is due at the end of 10 years.
Using an online financial calculator, the future debt will total $18,771.37 with a total compounded interest of $8,771.37 ($18,771.37 - $10,000).
FV = $18,771.37
Total Interest $8,771.37
g Novak Corp. started the year with $73200 in its Common Stock account and a credit balance in Retained Earnings of $53700. During the year, the company earned net income of $58600, and declared and paid $24400 of dividends. In addition, the company sold additional common stock amounting to $34200. As a result, the balance in retained earnings at the end of the year would be
Answer:
the ending retained earnings balance is $87,900
Explanation:
The computation of the ending retained earnings balance is shown below:
= opening retained earning balance + net income - dividend paid
= $53,700 + $58,600 - $24,400
= $87,900
Hence, the ending retained earnings balance is $87,900
We simply applied the above formula
Last year Viera Corp had $155,000 of assets, $305,000 of sales, $20,000 of net income, and a debt-to-total-capital ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, total invested capital, sales, and the debt to capital ratio would not be effected. By how much would the cost reduction improve the ROE?
Answer:
13.41%
Explanation:
Calculation for By how much would the cost reduction improve the ROE
First step
Debt value = $155,000 × 37.5%
Debt value = $58,125
Second step
Equity value = $155,000 - $58,125
Equity value $96,875
Third step
= (Net income ÷ Total equity) × 100
Ratio = ($20,000 ÷ $96,875) × 100 = 20.65%
New ROE would be = ($33,000 ÷ $96,875) × 100 = 34.06%
Fourth step
Change in ROE= New ROE - Old ROE
ROE= 34.06% - 20.65%
ROE= 13.41%
Therefore By how much would the cost reduction improve the ROE is 13.41%
old Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials $ 25,000
Work in process $ 10,000
Finished goods $ 40,000
During the year, the following transactions were completed:
Raw materials purchased on account, $275,000.
Raw materials used in production, $280,000 (materials costing $220,000 were charged directly to jobs; the remaining materials were indirect).
Costs for employee services were incurred as follows:
Direct labor $ 180,000
Indirect labor $ 72,000
Sales commissions $ 63,000
Administrative salaries $ 90,000
Rent for the year was $18,000 ($13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities).
Utility costs incurred in the factory, $57,000.
Advertising costs incurred, $140,000.
Depreciation recorded on equipment, $100,000. ($88,000 of this amount related to equipment used in factory operations; the remaining $12,000 related to equipment used in selling and administrative activities.)
Manufacturing overhead cost was applied to jobs, $ ? .
Goods that had cost $675,000 to manufacture according to their job cost sheets were completed.
Sales for the year (all paid in cash) totaled $1,250,000. The total cost to manufacture these goods according to their job cost sheets was $700,000.
Required:
1. Prepare journal entries to record the transactions for the year.
2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the beginning balances in your inventory accounts).
3A. Is Manufacturing Overhead underapplied or overapplied for the year?
3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. (All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.)
Answer:
Req 1:
No Transaction General Journal Debit Credit
1 a. Raw materials 275,000
Accounts payable 275,000
2 b. Work in process 220,000
Manufacturing overhead 60,000
Raw materials 280,000
3 c. Work in process 180,000
Manufacturing overhead 72,000
Sales commisions expense 63,000
Admin salaries expense 90,000
Salaries and wages payable 405,000
4 d. Manufacturing overhead 13,000
Rent expense 5,000
Accounts payable 18,000
5 e. Manufacturing overhead 57,000
Accounts payable 57,000
6 f. Advertising expense 140,000
Accounts payable 140,000
7 g. Manufacturing overhead 88,000
Depreciation expense 12,000
Accumulated depreciation 100,000
8 h. Work in process 297,000
Manufacturing overhead 297,000
9 i. Finished goods 675,000
Work in process 675,000
10 j(1). Cash 1,250,000
Sales 1,250,000
11 j(2). Cost of goods sold 700,000
Finished goods 700,000
Req 2: Screenshot Attached
Req 3A:
Manufacturing Overhead is Overapplied
Req 3B:
Manufacturing Overhead 7,000
Cost of Goods Sold 7,000
Req 4: Screenshot Attached
Changes in population can:_________.
a. cause the price of a good or service to decrease in an area but cannot cause the price to increase.
b. shift the demand curve of a good or service in an area.
c. cause the price of a good or service to increase in an area but cannot cause the price to decrease.
d. alter the supply of a good or service in an area.
e. shift the supply curve of a good or service in an area.
Answer:
I'm thinking it is C. and D (if multiple choice)
Answer:
The Answer is C
Explanation:
It wouldn't go down if more people will be able to buy the good
Consider an economy in which money does not exist, so that agents rely on barter to carry out transactions. When the economy was small, barter seemed sufficient. However, the economy has now begun to grow. If people in this economy trade five goods, the price tag of each good must list____prices, and the economy requires____prices for people to carry out transactions. Suppose that the number of goods people trade increases to 17. Then the price tag of each good must list____prices, and the number of prices that the economy requires increases to____.
Now suppose that our economy has a money. The government now issues a national currency and there is no longer any barter. In this economy, money and currency are not the same because:____.
1. The fact that the government issues currency means that the currency will be accepted as money by all agents.
2. The fact that the currency is backed by the government means that it will never lose value and will remain a perfect unit of account.
3. Just because the government issues currency does not mean that the currency will be accepted as money, since it must be used as a medium of exchange, store of value and standard of value.
4. Just because the government issues currency does not mean that the currency will be accepted as money, and buyers and sellers still need barter to ensure that money does not lose its value.
Suppose now that our economy is suffering from rapid, ongoing increases in the cost of living. Which characteristic of money is directly negatively impacted in that economy?
1.Medium of exchange.
2.Double coincidence of wants.
3.Store of value.
4.Unit of account.
Answer:
4. Just because the government issues currency does not mean that the currency will be accepted as money, and buyers and sellers still need barter to ensure that money does not lose its value.
Suppose now that our economy is suffering from rapid, ongoing increases in the cost of living. Which characteristic of money is directly negatively impacted in that economy?
3.Store of value.
Explanation:
At the end of April, the first month of the company's year, the usual adjusting entry transferring rent earned to a revenue account from the unearned rent account was omitted. Indicate which items will be incorrectly stated, because of the error, on (a) the income statement for April and (b) the balance sheet as of April 30. Also indicate whether the items in error will be overstated or understated.
Answer:
Overstatement is the situation where the amount of any item has been stated more than its actual figure
Understatement is the situation where the amount of any item has been stated less than its actual figure
a. The rent earned will be understated, as a result of which the income statement will give a lower net income.
b. Because of lower net income, retained earnings in stockholders' equity will be understated, and the liability account of unearned rent will be overstated
Golden Eagle Company prepares monthly financial statements for its bank. The November 30 and December 31 adjusted trial balances include the following account information:
30-Nov 31-Dec
debit   credit debit credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500
The following information also is known:
a. Purchases of supplies during December total $3,500.
b. Supplies on hand at the end of December equal $3,000.
c. No insurance payments are made in December.
d. Insurance cost is $1,500 per month.
e. November salaries payable of $10,000 were paid to employees in December. Additional salaries for December owed at the end of the year are $15,000. On November 1, a tenant paid Golden Eagle $3,000 in advance rent for the period November through January, and Deferred Revenue was credited for the entire amount.
Required:
Show the adjusting entries that were made for supplies, prepaid insurance, salaries payable, and unearned revenue on December 31.
Answer:
Golden Eagle Company
Adjusting Journal Entries:
a. Debit Supplies $3,500
Credit Cash $3,500
To record the purchase of supplies during December.
b. Debit Supplies Expense $2,500
Credit Supplies $2,500
To record the used supplies for the month.
d. Debit Insurance Expense $1,500
Credit Prepaid Insurance $1,500
To record expired insurance expense for the month.
e. Debit Salaries Payable $10,000
Credit Cash $10,000
To record the payment of salary arrears.
f. Debit Salaries Expense $15,000
Credit Salaries Payable $15,000
To record unpaid salaries for the month.
g. Debit Unearned Revenue $1,000
Credit Earned Revenue $1,000
To record earned revenue for the month.
Explanation:
a) Data and Calculations:
Golden Eagle Company
Adjusted Trial Balances as of November 30 and December 31 (Partial):
30-Nov 31-Dec
Debit Credit Debit Credit
supplies $2,000 $3,500
prepaid Insurance $8,000 $6,000
salaries payable $11,000 $16,000
unearned revenue $3,000 $1,500
Adjusting Entries for Supplies, Prepaid Insurance, Salaries Payable and Unearned Revenue on December 31:
a. Supplies $3,500 Cash $3,500
b. Supplies Expense $2,500 Supplies $2,500
d. Insurance Expense $1,500 Prepaid Insurance $1,500
e. Salaries Payable $10,000 Cash $10,000
f. Salaries Expense $15,000 Salaries Payable $15,000
g. Unearned Revenue $1,000 Earned Revenue $1,000
You work in the finance division of a company listed in the Stock Exchange. You have just learned that your supervisor has been using infomation on quarterty retums, prior to the time they are made public, to trade in the company's stock. Is this unethical? If yes, name the elhical issue. Explain why you think there is or not an ethical issue
Answer:
Yes it is. Ethical issue ⇒ Insider Trading.Explanation:
Trading on the stock exchange is supposed to be as fair as possible so that every investor has a fair chance of making returns. If a person - like this supervisor - is using information that is material but not publicly disclosed yet to trade on markets, the fairness of the market is compromised because the person will have an edge over other investors which will enable them make unfair profits.
Information on quarterly returns is usually material so we can expect it to be material here as well which means that the supervisor is engaged in insider trading.
Insider trading is not only unethical but also highly illegal. Reporting your supervisor can get them sent to jail.
Quality improvement, relevant costs, relevant revenues. SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows:
Variable Cost Fixed Cost Total Cost
Rework Cost per hr. $79 $115 $194
Repair Cost
Customer Support cost/hr. 35 55 90
Transportation Cost/load 350 115 465
Warranty repair cost/hour 89 150 239
Speed Print’s current presses have a quality problem that causes variations in the shade of some colors. Its engineers suggest changing a key component in each press. The new component will cost $70 more than the old one. In the next year, however, Speed Print expects that with the new component it will
(1) save 14,000 hours of rework,
(2) save 850 hours of customer support,
(3) move 225 fewer loads,
(4) save 8,000 hours of warranty repairs, and
(5) sell an additional 140 printing presses, for a total contribution margin of $1,680,000. SpeedPrint believes that even as it improves quality, it will not be able to save any of the fixed costs of rework or repair. SpeedPrint uses a 1-year time horizon for this decision because it plans to introduce a new press at the end of the year.
1. Should SpeedPrint change to the new component? Show your calculations.
2. Suppose the estimate of 140 additional printing presses sold is uncertain. What is the minimum number of additional printing presses that SpeedPrint needs to sell to justify adopting the new component?
3. What other factors should managers at SpeedPrint consider when making their decision about changing to a new component?
Answer:
1. Speed print SHOULD CHANGE to the new component
2. Since the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
3. Nonfinancial factors
Explanation:
1. Calculation to show whether Speed print
should change to the new component
First step is to calculate the Relevant costs
Relevant costs = $70 *18,000 copiers
Relevant costs= $1,260,000
Second step is to calculate Relevant Benefits
RELEVANT BENEFITS
Savings in rework costs $1,106,000
($79 *14,000 hours)
Add Savings in customer-support costs $29,750
($35 *850 hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Add Contribution margin from increased sales $1,680,000
Cost savings and additional contribution margin $3,606,500
($1,106,000+$29,750+$78,750+$712,000+$1,680,000)
Based on the above calculation relevant benefits of the amount of $3,606,500 is higher than the relevant costs of the amount of $1,260,000 which means that Speed print
SHOULD CHANGE to the new component.
2. Based on the above calculation it shows that the new components incremental cost of the amount of $1,260,000 is lesser than the incremental savings of the amount of $1,926,500 which means that it will be of benefit if SpeedPrint invest in the new component.
Calculation for INCREMENTAL SAVINGS
Savings in rework costs $1,106,000
($79 *14,000 rework hours)
Add Savings in customer-support costs $29,750
($35 *850 customer-support hours)
Add Savings in transportation costs for parts $78,750
($350 *225 fewer loads)
Add Savings in warranty repair costs $712,000
($89 *8,000 repair-hours)
Incremental savings $1,926,500
($1,106,000 + $29,750 + $78,750 + $712,000)
3. The factors that the managers at SpeedPrint should consider when making their decision about changing to a new component will be NON-FINANCIAL FACTORS.